Press Room

News Articles

Press Releases

Number Crunching - A Laboratory Owner Speaks by Cassandra Corcoran

"Number Crunching - A Laboratory Owner Speaks." Cassandra Corcoran Journal of Dental Technology April 2010: 19-21

Mark C. Jackson, RDT, is well known in the industry for sharing the lessons he has learned while running Precision Ceramics Dental Laboratory, DAMAS, in Montclair, Calif. He does so informally at industry events and on online forums. He does it in a more structured format every month in his JDT Unbound (www.jdtunbound.com) column, That's Life. So when we were looking for a laboratory owner to share a warts and all personal experience with production pay, we knew Jackson was our man.

JDT: What did you do before implementing production pay at your laboratory?

MJ: We paid our technicians hourly. Some of our supervisors were paid salary, but really, in retrospect I don't think that classification was accurate as they probably didn't qualify as exempt employees, even though they were performing in a supervisory capacity. Once we implemented a production-based pay program, we found an appropriate method of compensation, consummate with their true job description allowing for pay earned while doing production work, yet compensating them fairly for training and supervising.

JDT: What does pro-pay mean at your laboratory?

MJ: Pro-pay means production pay in our laboratory. It is an organic system, and not the pro-pay program that was popular in the late 1980's. In fact we avoid using their term pro-pay.

JDT: How does the production pay program work at your laboratory?

MJ: Our version of production pay has a negotiated minimum guaranteed compensation with an overriding production differential. In our laboratory we have a multi-tiered incentive system intended to propagate an apprentice program, and a career path via incremental skill levels. Our program encourages and incentives cross training and continuing education. Our production pay system satisfies all state and federal labor laws, and includes a comprehensive benefits package including 401k with matching, health and dental insurance and two weeks of vacation.

JDT: How do your new hires react to the system?

MJ: The dental laboratory culture in Southern California is different from anywhere else in the world. Technicians here are accustomed to production based compensation and are usually very familiar with how it works. They are usually pleasantly surprised to discover that they can negotiate a guaranteed minimum and be assured they will always have a salary they can depend on for their family. Unfortunately, some laboratories have abused the system but our version of the program gives them a certain comfort level that helps them embrace and often excel at production based pay.

JDT: What are the benefits to the laboratory when using a production pay?

MJ: Direct labor costs are a laboratory's biggest expense. I have known laboratory owners who are only profitable in the first and fourth quarters of the year when their historical production numbers are high. During the slower months they are carrying technician payroll numbers as high 60 percent. Having compensation systems tied to production means payroll numbers are nearly always on budget, no matter wheat sales are (within reason). Additionally, most laboratories will experience an improvement in quality, an improvement in morale, faster turnaround, improved consistency, less overtime and measurably higher technician skill levels.

JDT: What are the benefits to the employee when receiving pro pay?

MJ: Nowhere have I seen 80/20 rule demonstrated better than in my own laboratory and in the laboratory I worked at as a young technician. There were always a handful of technicians who would be counted on to make sure rush cases were accommodated and who when pressed could out produce anyone, including myself. The problem was there was no incentive to do so. In fact, most employees view this as an unfair work environment. Likewise, cross training becomes a burden for most lab owners as technicians become comfortable with their primary task.

Production based pay systems like the one at Precision Ceramics reward superior productivity, but also incentivize and reward cross training and eduction. Technicians feel more in control of their earning power and can choose a path of career development that appeals to them and is outlined within the program. Another major benefit is flex time and family leave. Technicians who are compensated the same if they work six hours or eight, will spend more time at home and are free to adjust their schedule as needed for family or personal business. Morale is improved dramatically.

JDT: What are the negatives for production pay both for the laboratory and the employee?

MJ: Of course there is no perfect system for compensation. Some technicians become accustomed to a higher standard of living when production levels are high and the daily throughput is at or near maximum capacity. But when things slow down, as they did for us in parts of 2009, some technicians found that their pay dipped back down to the negotiated minimum that was agreed upon at the time of their initial employment. Even with annual adjustments for inflation that salary is often times a difficult one to live on once a person becomes accustomed to earning two to three time the national average for a dental technician.

For the lab owner, there come some difficult times when production drips below even the point of covering the guaranty and he faces the same issue a salary or hourly employer has. Fortunately a lab owner who uses production based compensation can still use the same management tools his hourly counterparts use, such as furlough days, limiting hours and forced vacation.

JDT: What are some of the biggest misconceptions about production pay?

MJ:

That production based pay is illegal. This is untrue, as long as all state and federal labor laws are observed including reporting of hours, overtime and insisting on break times (in California.)
That quality will suffer. This is also untrue. Technicians who are paid on a production based system will get into a groove and produce more consistent work, will have less distractions and will be less inclined to overwork cases in an attempt to stretch the work to fill the time allotted.
That morale will suffer. Like any compensation system, it can be abused by both parties, so it will need to be properly managed. A multi-tier production based pay system will help improve morale and reduce employee turnover.

JDT: Would you ever go back to the pay system you used before implementing pro pay?

MJ: Not on a bet.

JDT: What are the three most important things laboratory owners should understand about production pay?

MJ:

Production based compensation will improve efficiency, improve throughput, improve morale, increase profitability, improve quality and raise overall technical skill levels.
Production based compensation systems will reduce employee turnover and lower training costs.
Implementing production based compensations systems is not simple and it's important that the system is run in parallel (with your current system) before launching (so it) is understood by all employees and managed carefully, especially with case tracking and reporting. NADL University has good programs for labs interested in implementing a production based compensation system.

JDT: What should we have asked that we didn't?

MJ: What methods do you recommend for case tracking? At Precision Ceramics we use bar coded work tickets and bar coded name badges/security cards. Other tracking systems we have employed include stamps and initials on work tickets and technician generated production logs.

(Another question is) how is overtime calculated if a technician is paid by the unit? In our laboratory (located in California) the technician's pay is based on total production divided by the total number of hours worked. For example, if $200 is produced in 10 hours , the average hourly wage for the day is $20 per hour. That is the base rate for the first eight hours and $30 is used for the two overtime hours. JDT

Number Crunching - A Laboratory Owner Speaks by Cassandra Corcoran To read the full article Number Crunching click here.

Email to a Friend

Press Room

Number Crunching - A Laboratory Owner Speaks by Cassandra Corcoran

DENTISTS

CBCT SCAN

LABORATORIES

VETERINARIANS